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30.8.13

EPP endorses and speaks at the Syncron Pricing Seminar on 17th of October (Birmingham)

Learn which Pricing Methodologies to Utilize to Help Companies Win More Business for Spare Parts Pricing

Few companies take full advantage of the opportunity Spare Parts Pricing offers. The result: significant untapped profit potential!

Whilst many companies will perform well in 2013, a select group will reach beyond normal limitations to outperform their peers. Today, many manufacturers recognise that the key to improving margins and revenues is the implementation of a Global Price Management process. These companies realise that widespread use of spreadsheets for analysing and managing prices is increasingly inadequate, and understand the strong need to break away from the constraints of cost plus pricing methods, and develop effective market based pricing. This creates new possibilities for best in class companies to defend and increase their market share.

By attending this FREE half day seminar on the 17th October, you will learn which pricing strategies are important to utilize to help companies win more business! Syncron will also share examples of how companies have successfully adapted their processes, and profited from Value Based Pricing for their Aftermarket Parts.

The Seminar covers:

Identifying the principles for setting prices i.e. cost, or some other value driver;

Benchmarking against competitor data to price parts;

How to make sure you have all your necessary data available to undertake a pricing project;

Segmenting parts pricing into different categories;

Identifying which types of spare parts present the best opportunity for margin improvement;

Finding the best method to correctly price unique/captive parts;

Support and guidance for writing a business case when undertaking a pricing project.

This event is endorsed by the European Pricing Platform.

Pol Vanaerde, Founder and President of European Pricing Platform, will act as guest speaker at this event on the topic 'Economic Value Calculator'.

Registration is free, so we hope to welcome and meet you all on October 17th 2013 at the Ardencote Manor Hotel Country Club & Spa in Warwick (close to Birmingham Airport) !

29.8.13

Today we welcome Dr. Mark Friesen, board member of the European Pricing Platform (EPP) in Germany, Austria and Switzerland, as guest blogger to The European Pricing Blog. With his company QUINTA Consulting, he advises medium-sized companies in B2C and B2B projects in marketing and pricing. After studying business administration in Oestrich-Winkel, Madrid and Chicago, he received his Ph.D. on price fairness at the University of St. Gallen. Subsequently, he worked in various management positions at Deutsche Lufthansa AG in Frankfurt and Brussels. Prior to his consulting work, he spent three years as Head of Pricing at the APCOA car Parking Holdings GmbH. He is also a lecturer in economics and pricing at the University of St. Gallen and the Lucerne University of Applied Sciences and Arts.

The strong Swiss frank has made shopping for all kind of products in Switzerland a quite expensive enterprise. Compared to retail prices in neighbouring countries like Germany Swiss prices always tend to be higher due higher purchasing power and willingness to pay of Swiss consumers. However, a recent study of QUINTA Consulting shows that retail prices for milk chocolate are surprisingly higher in Germany than in Switzerland. Despite the unfavorable exchange rate the study indicates that four of six chocolate brands are more expensive in Germany.

To make international price management a success the study suggests three pricing principles:

use of price discrimination and versioning for exclusive Swiss retail products to create additional customer value,

application of psychological means of price promotion and transparency to help customers to perceive Swiss retail prices differently, and

to communicate retail price changes to the Swiss consumer as fairly and early as possible.

20.8.13

We came across a very interesting article shared by Tim Smith on LinkedIn. At EPP we are just rounding off our pricing maturity study at the moment, analysing where EU companies are when it comes to pricing. Results coming soon, very interesting insights... In the meantime, here is the article posted originally in the Economist on 27 July 2013.

In an age of austerity businesses need to get better at charging more...

WHEN bosses promise to make their companies more profitable they usually say they will do so by increasing sales or cutting costs. But a third road to profits is rarely mentioned: putting prices up. Managers often fail to ask how they might do better at plucking the goose to obtain the most feathers with the least hissing. The spiel from the management consultants who advise companies on pricing—whether specialists like Simon-Kucher or giant generalists like PWC—is that it is now more vital than ever to be smart at it. In today’s austere age many businesses cannot depend on rising sales volumes to lift their profits. As for cutting costs, most have already pared them to the bone. Prices are all that is left. And a business can do a lot with clever pricing, to boost its share of the limited spending-power that is out there.

Makers of high-tech products such as smartphones can opt to add whizzy new features and push up prices. In the case of luxury goods, their exclusivity is a large part of their appeal, and this in turn is a function of their price, so firms usually have scope for limiting supply and charging more: Ferrari, a sports-car maker, and Mulberry, a purveyor of posh bags, have both recently signalled that they plan to do just that. But raising prices by making products better or more exclusive is a strategic decision, open to only a few types of business. For all sorts of mundane goods and services there is much that can be done tactically, the consultants say, to charge more for the same thing.

First, firms should simply take pricing more seriously: have a clear policy and make everyone stick to it. Obvious? At a recent conference organised by Simon-Kucher, the 100 or so delegates were asked to put their hands up if their company had a written pricing policy. Just two did so. Setting prices, promotions and discounts is often left to junior people and local sales offices. Even where a policy is set from the top, the salespeople may ignore it because they are still being rewarded for maximising sales and keeping customers. Neil Hampson, a pricing expert at PWC, says he sometimes starts his client meetings by asking: “When was the last time you congratulated a salesman for walking away from a client?” Most have never done so.

Second, companies need to remember that, as the late Peter Drucker, a management guru, once put it, customers do not buy products, they buy the benefits that these products and their suppliers offer to them. So, businesses that fail to identify what benefits they are offering each type of customer are likely to be undercharging some of them. Equipment-makers who sell to other businesses can be especially prone to a “cost-plus” mentality, in which they charge the same margin to everyone instead of identifying those that are less price-sensitive and finding ways to earn more from them. Oil companies, for example, can suffer huge costs in lost drilling time if a pump goes down, so pump-makers could charge them a premium for guaranteed same-day dispatch of spares.

Airlines have learned to “unbundle” their product, charging separately for baggage and meals and increasing their overall takings. But industrial suppliers may still charge the same to customers who never call their technical helpline as to those who ring it daily. Makers of everything from aircraft engines to lorry tyres have gone further in selling benefits rather than products, by offering “power by the hour” contracts in which customers only pay when they use their goods. The suppliers earn more overall, while their customers preserve scarce capital.

A third route to charging more is to manage customers’ expectations better. In the early 2000s executives at General Motors were told to wear badges with “29” on their lapels, as part of a disastrous plan to get back to a 29% market share in America. This merely reinforced car-buyers’ assumption that GM would offer them whatever discounts it took to shift its metal off the forecourts, putting the firm on the road to bankruptcy. (Last year its market share fell to 17.5%, its lowest since the 1920s.) Once customers know that a firm’s price list is a work of fiction and that it will resort to discounts as soon as sales dip, it will be a long haul to get them used to paying full price, let alone accepting increases. Simon-Kucher’s consultants praise DHL, a logistics firm, which spent years drilling into its customers that whatever the economic conditions there will be a rate rise each year.

You’ve been framed

Fourth, there are lots of simple presentational tricks that almost everyone is wise to but which still, miraculously, work. Restaurants add some overpriced wines lower down the menu to make the ones at the top seem reasonable. Makers of ice cream offer “33% extra free” rather than “25% off” the cost of the regular size, even though these are arithmetically the same thing. Buyers at big industrial firms are just as susceptible to such “framing” when reviewing a list of widget prices.

The pricing experts make it sound so easy. But there are of course limits to how far firms can go in tailoring their prices to the customer without appearing sneaky. Last year Orbitz, an online travel agency, was criticised for offering a costlier selection of hotels to people browsing its site on an Apple Mac because it assumed they were richer than PC users. Although a firm’s customers may not notice the odd price rise slipped in here and there, they will eventually notice if their overall bill starts to swell: Tesco, Britain’s biggest grocer, is now having to offer expensive discounts to win back a damaged reputation for value.

And sticking to a pricing strategy takes guts. The irony, confides a senior management consultant, is that firms like his have such a taboo against letting go of a client that they are the worst at taking their own advice to be fearless in asking for more, and walking away if they do not get it.

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About the European Pricing Platform

European Pricing Platform is a ‘Not-for-Profit’ knowledge sharing place focused to support business management, pricing and profit optimisation professionals and CXO-level executives in Europe over a variety of industries and sectors. Our target is to update the pricing and profit optimisation know-how of the business manager. Our mission is to be the on- and offline pricing media for international decision makers in a wide range of industries. The interactive sharing, collecting and development of pricing and profit optimisation knowledge are the key elements of our platform.

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